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We like to talk about healthcare like it's a free market but it's not. If I'm at the hospital I'm there for treatment. I'm not leaving until I get it, damn the

We like to talk about healthcare like it's a free market but it's not. If I'm at the hospital I'm there for treatment. I'm not leaving until I get it, damn the cost. I will not consume less healthcare because the price is higher when the other option is death. We need some price setting regulation to protect consumers from getting fleeced. When the hospital knows that I'm going to say yes, why not price every surgery at $100k? We've tried letting the insurance companies regulate the price, but they've proven themselves incapable either because there are so many secrets making the market not fair or because they don't have an incentive. It is time to try something else. The government is our mechanism for regulation. Let's use it.

cheald 7y ago
You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible). It's also incorrect to pretend that all healthcare goods have the same elasticity of demand, as well as to pretend that even emergency healthcare is perfectly inelastic. The reason this matters is that we don't see the same problems in other inelastic markets - for example, automotive gasoline is highly inelastic (estimated to be at -0.02 - https://www.eia.gov/todayinenergy/detail.php?id=19191 https://www.eia.gov/todayinenergy/detail.php?id=19191), but we don't have the same pricing pathology with it that we do with healthcare (emergency healthcare estimated to be at -0.04 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/). Therefore, we can't conclude that the problems are specifically due to inelasticity.
- drieddust 7y ago
  > You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible) Next time when a bone in broken in your body, go comparison shopping because it's a free market and you should get the best deal while your bones hang freely. Health care is a special case not comparable with any other market.
  - jyrkesh 7y ago
    It's semantics, but they're important when you're talking about economics. You're describing inelasticity of demand, which is to say that I need the good irrespective of the price (and it may mean irrespective of the geographic inefficiency). In a free market, I can open a hospital across the street from your hospital and charge whatever I want for similar (or completely different) services. Presumably, our hospitals would also have a brand reputation: I know lots of folks who say "I'll never go to X HMO again, it's so much better at Y public hospital" and would gladly drive an extra mile or two with their broken arm kid if it means they're fairly certain they'll save a few grand (or more). A similar example is that I'm halfway down a 200 mile highway, and I need gasoline. There could be one gas station, there could be five, but the fact that I'm allowed to open a gas station next to the sole one that exists means it's a free market. If the government says "there shall be one [or two, or ten]" gas stations here, or that "all gas stations here shall charge this rate", then it's less of a free market. You may be trying to describe the concept of perfect competition[1]. If so, I'd agree with you that health care can almost never achieve perfect competition because perfect information becomes harder to obtain as situations become more expedient or dire. [1] https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition
  - Fjolsvith 7y ago
    In my community in western Kansas, there are two hospitals nearly equidistant from us. An ambulance crew asks which one do we want to go to. Why would cost not play a role in that decision?
    - jjwhitaker 7y ago
      Cost should play a role but I don't think it should ever cross your mind or need to be a decision you have to make. In your anecdotal situation let's say you fell and broke your arm and are now sitting in the back of the ambulance when they ask that question. North or South hospital? With your one good arm are will you load up a cost comparison of services between the hospitals, checking what the procedure might be if the break is impacted, if muscle tissue is torn or needs to be repaired surgically, what followups or cast removal costs, and building a spreadsheet of possible scenarios based on the underlying medical statistics combined with the risk factors of your incident? Ar you comparing that against hospital ratings for those departments and doctors and their success rates combined with education or training in line with best practices or regulations? Then are you compiling this data to make a decision based on which hospital is the most viable economically vs the standard of care for your suspected injury and reaching a decision? Are you going to do this for every viable healthcare situation in advance so you're aware of updated costs at South or the new star surgeon hired at North hospital? There's certainly a market for that analysis but I don't think it's analogous to real life. Most people are going to call 911, get in the ambulance if needed, and go to the closest hospital with capacity. The price, quality, and other checks need to happen at a higher level while still be transparent and open. Medicare has tools to solve this just like how the FDA us meant to resolve food safety questions and other governing bodies are there to regulate and enforce standards. Unfortunately it's not as simple libertarian as "North or South?"
- henryfjordan 7y ago
  You're right, healthcare as I am describing it is a perfectly inelastic service. I cannot think of any other example where someone would show me an absurd price and I'd still take like. Like $1M absurd. I'd rather push my car than buy gas at some point. The same cannot be said about my health. There is no point at which I'd rather just die. The government needs to regulate markets like this.
  - cheald 7y ago
    If healthcare is perfectly inelastic and inelasticity is the dominant factor in pricing, shouldn't we expect all procedures cost $LIFE_SAVINGS each already? I'm not trying to be glib; my point is that a) healthcare is _not_ perfectly inelastic, and b) even in the presence of high inelasticity, we can observe that market forces can exert downwards pressure on pricing. I think that arguing for a remedy solely on the basis of elasticity is misguided and potentially ignores larger problems within the market. Consider the example of food, in general. Demand for food is wildly inelastic - without it provided regularly, for your entire life, you _will_ die. If elasticity were the only consideration in pricing, we should expect food to be break-the-bank expensive, but it clearly isn't. What else is different between the healthcare and food markets? (To be clear, I'm not defending the current state of our healthcare system. It's broken in a lot of ways, and is way more expensive than it needs to be. I'm just arguing against the idea that the cause of its dysfunction is inelasticity of demand.)
    - henryfjordan 7y ago
      I think for many many people, all procedures already do cost $LIFE_SAVINGS. Don't > half of Americans live paycheck to paycheck?
      - fucking_tragedy 7y ago
        Yes, nearly 80% of Americans live paycheck to paycheck[1]. [1] https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/ https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...
com2kid 7y ago
> We like to talk about healthcare like it's a free market but it's not. Emergency medical care isn't. But most other things are. It should be possible to shop around for imaging and testing services. The regular "family doctor" is something families can (or at least should) be able to choose at will. Heck people shop dentists all the time. They shop physical therapists, and even mental health providers. If all the local X-Ray providers near me publish their prices online the fact is prices will drop, and that will likely carry over to what price is paid during emergency services as well. It will be hard to charge someone 5k for an X-Ray in the same imaging center that has a price of $120 listed on their website!
- robryan 7y ago
  In Australia elective procedures on medicare are much more limited or not covered at all. A system can start by just covering the most essential and required care, then later expand to additional things.
- conductr 7y ago
  My insurance company calls me after I schedule a service like lab/imaging to tell me of cheaper options. My doctors are attached to professional building at big local hospital chain, so I usually just go there because it’s easy, I know my way around, they are on same IT platform so I don’t have to chase down results, or long term they have all my medical history localized. Due to being attached to hospital though, cost of MRI for example is usually 10x versus competition. I still don’t care, because I have insurance and have no incentive to reduce the cost. So if you want to make people price shop, it has to be coming out of their pockets for it to work. Dentists, PT, etc that you listed have much higher rates of cash/self pay.

cheald 7y ago

You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible). It's also incorrect to pretend that all healthcare goods have the same elasticity of demand, as well as to pretend that even emergency healthcare is perfectly inelastic. The reason this matters is that we don't see the same problems in other inelastic markets - for example, automotive gasoline is highly inelastic (estimated to be at -0.02 - https://www.eia.gov/todayinenergy/detail.php?id=19191 https://www.eia.gov/todayinenergy/detail.php?id=19191), but we don't have the same pricing pathology with it that we do with healthcare (emergency healthcare estimated to be at -0.04 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5600717/). Therefore, we can't conclude that the problems are specifically due to inelasticity.

drieddust 7y ago
> You're describing inelasticity of demand, which has nothing to do with whether or not a market is free in the economic sense (that is, whether supplier competition and consumer substitution are possible) Next time when a bone in broken in your body, go comparison shopping because it's a free market and you should get the best deal while your bones hang freely. Health care is a special case not comparable with any other market.
- jyrkesh 7y ago
  It's semantics, but they're important when you're talking about economics. You're describing inelasticity of demand, which is to say that I need the good irrespective of the price (and it may mean irrespective of the geographic inefficiency). In a free market, I can open a hospital across the street from your hospital and charge whatever I want for similar (or completely different) services. Presumably, our hospitals would also have a brand reputation: I know lots of folks who say "I'll never go to X HMO again, it's so much better at Y public hospital" and would gladly drive an extra mile or two with their broken arm kid if it means they're fairly certain they'll save a few grand (or more). A similar example is that I'm halfway down a 200 mile highway, and I need gasoline. There could be one gas station, there could be five, but the fact that I'm allowed to open a gas station next to the sole one that exists means it's a free market. If the government says "there shall be one [or two, or ten]" gas stations here, or that "all gas stations here shall charge this rate", then it's less of a free market. You may be trying to describe the concept of perfect competition[1]. If so, I'd agree with you that health care can almost never achieve perfect competition because perfect information becomes harder to obtain as situations become more expedient or dire. [1] https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition
- Fjolsvith 7y ago
  In my community in western Kansas, there are two hospitals nearly equidistant from us. An ambulance crew asks which one do we want to go to. Why would cost not play a role in that decision?
  - jjwhitaker 7y ago
    Cost should play a role but I don't think it should ever cross your mind or need to be a decision you have to make. In your anecdotal situation let's say you fell and broke your arm and are now sitting in the back of the ambulance when they ask that question. North or South hospital? With your one good arm are will you load up a cost comparison of services between the hospitals, checking what the procedure might be if the break is impacted, if muscle tissue is torn or needs to be repaired surgically, what followups or cast removal costs, and building a spreadsheet of possible scenarios based on the underlying medical statistics combined with the risk factors of your incident? Ar you comparing that against hospital ratings for those departments and doctors and their success rates combined with education or training in line with best practices or regulations? Then are you compiling this data to make a decision based on which hospital is the most viable economically vs the standard of care for your suspected injury and reaching a decision? Are you going to do this for every viable healthcare situation in advance so you're aware of updated costs at South or the new star surgeon hired at North hospital? There's certainly a market for that analysis but I don't think it's analogous to real life. Most people are going to call 911, get in the ambulance if needed, and go to the closest hospital with capacity. The price, quality, and other checks need to happen at a higher level while still be transparent and open. Medicare has tools to solve this just like how the FDA us meant to resolve food safety questions and other governing bodies are there to regulate and enforce standards. Unfortunately it's not as simple libertarian as "North or South?"
henryfjordan 7y ago
You're right, healthcare as I am describing it is a perfectly inelastic service. I cannot think of any other example where someone would show me an absurd price and I'd still take like. Like $1M absurd. I'd rather push my car than buy gas at some point. The same cannot be said about my health. There is no point at which I'd rather just die. The government needs to regulate markets like this.
- cheald 7y ago
  If healthcare is perfectly inelastic and inelasticity is the dominant factor in pricing, shouldn't we expect all procedures cost $LIFE_SAVINGS each already? I'm not trying to be glib; my point is that a) healthcare is _not_ perfectly inelastic, and b) even in the presence of high inelasticity, we can observe that market forces can exert downwards pressure on pricing. I think that arguing for a remedy solely on the basis of elasticity is misguided and potentially ignores larger problems within the market. Consider the example of food, in general. Demand for food is wildly inelastic - without it provided regularly, for your entire life, you _will_ die. If elasticity were the only consideration in pricing, we should expect food to be break-the-bank expensive, but it clearly isn't. What else is different between the healthcare and food markets? (To be clear, I'm not defending the current state of our healthcare system. It's broken in a lot of ways, and is way more expensive than it needs to be. I'm just arguing against the idea that the cause of its dysfunction is inelasticity of demand.)
  - henryfjordan 7y ago
    I think for many many people, all procedures already do cost $LIFE_SAVINGS. Don't > half of Americans live paycheck to paycheck?
    - fucking_tragedy 7y ago
      Yes, nearly 80% of Americans live paycheck to paycheck[1]. [1] https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/ https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...

com2kid 7y ago

> We like to talk about healthcare like it's a free market but it's not. Emergency medical care isn't. But most other things are. It should be possible to shop around for imaging and testing services. The regular "family doctor" is something families can (or at least should) be able to choose at will. Heck people shop dentists all the time. They shop physical therapists, and even mental health providers. If all the local X-Ray providers near me publish their prices online the fact is prices will drop, and that will likely carry over to what price is paid during emergency services as well. It will be hard to charge someone 5k for an X-Ray in the same imaging center that has a price of $120 listed on their website!

robryan 7y ago
In Australia elective procedures on medicare are much more limited or not covered at all. A system can start by just covering the most essential and required care, then later expand to additional things.
conductr 7y ago
My insurance company calls me after I schedule a service like lab/imaging to tell me of cheaper options. My doctors are attached to professional building at big local hospital chain, so I usually just go there because it’s easy, I know my way around, they are on same IT platform so I don’t have to chase down results, or long term they have all my medical history localized. Due to being attached to hospital though, cost of MRI for example is usually 10x versus competition. I still don’t care, because I have insurance and have no incentive to reduce the cost. So if you want to make people price shop, it has to be coming out of their pockets for it to work. Dentists, PT, etc that you listed have much higher rates of cash/self pay.